Stock Analysis

If You Had Bought Chefs' Warehouse (NASDAQ:CHEF) Stock A Year Ago, You Could Pocket A 97% Gain Today

NasdaqGS:CHEF
Source: Shutterstock

If you want to compound wealth in the stock market, you can do so by buying an index fund. But if you pick the right individual stocks, you could make more than that. For example, the The Chefs' Warehouse, Inc. (NASDAQ:CHEF) share price is up 97% in the last year, clearly besting the market return of around 56% (not including dividends). That's a solid performance by our standards! And shareholders have also done well over the long term, with an increase of 48% in the last three years.

Check out our latest analysis for Chefs' Warehouse

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Over the last twelve months Chefs' Warehouse went from profitable to unprofitable. While some may see this as temporary, we're a skeptical bunch, and so we're a little surprised to see the share price go up. It may be that the company has done well on other metrics.

Unfortunately Chefs' Warehouse's fell 30% over twelve months. So the fundamental metrics don't provide an obvious explanation for the share price gain.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
NasdaqGS:CHEF Earnings and Revenue Growth March 13th 2021

This free interactive report on Chefs' Warehouse's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that Chefs' Warehouse shareholders have received a total shareholder return of 97% over the last year. That's better than the annualised return of 11% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Chefs' Warehouse (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process.

But note: Chefs' Warehouse may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

When trading Chefs' Warehouse or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted


Valuation is complex, but we're helping make it simple.

Find out whether Chefs' Warehouse is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020


Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.